Gold Weakens in Asia Driven by Inflation Concerns and Iran Tensions
Gold fell in Asian trading on Friday (June 5), influenced by expectations of higher inflation and interest rates due to diminished hopes for a US-Iran peace deal. Spot gold fell 0.8% to $4,440.84/oz, while futures fell 0.8% to $4,467.01/oz. This week, gold is likely to close the week down around 2.2%, its biggest decline since early May.
This movement was driven by escalating geopolitical tensions in the Middle East, including retaliatory strikes between the US and Iran, and Hezbollah's refusal to accept a ceasefire with Israel. This uncertainty has dampened hopes for a peace deal, impacting oil prices and global inflation.
Rising inflation is expected to lead to tighter monetary policy from major central banks, particularly the Federal Reserve. Rising interest rates reduce gold's appeal as a non-yielding asset. Besides gold, other precious metals are also under pressure; Spot silver fell 1.7% to $72.63/oz and platinum 0.9% to $1,880.76/oz, both posting weekly declines.
Market attention now turns to the US nonfarm payrolls data for May, which will provide further clues about labor market conditions and the direction of interest rates. Consensus expects US job growth to slow, due to the impact of the Iran war and slowing domestic economic growth.
The payrolls results could influence the Fed's stance; a strong figure could give the central bank room to maintain interest rates or allow for further increases. Meanwhile, four of the last six months of US payrolls have surprised to the upside, which is a concern for market participants ahead of today's release.
5 Key Points:
- Spot gold fell 0.8% to $4,440.84/oz; futures fell to $4,467.01/oz.
- Gold's weekly decline was around 2.2%, the largest since early May.
- US-Iran tensions and Hezbollah pressured gold prices, supporting inflation and oil.
- Inflation expectations and high interest rates are weighing on gold's appeal.
- The market is focused on US payrolls data for the Fed's next policy direction. (asd)
Source: Newsmaker.id
